To enable the reader to grasp Sismondi's doctrine as a whole, we shall first present an exposition of the principal conclusions he drew from this theory, and then proceed to the correction of his fundamental error that is given in Marx's *Capital*.

First and foremost, Sismondi draws from this erroneous theory of Adam Smith the conclusion that production must correspond to consumption, that production is determined by income. The detailed elaboration of this "truth" (testifying to a complete misunderstanding of the character of capitalist production) is devoted to the entire following chapter, VI: "The Mutual Determination of Production by Consumption and of Expenditure by Income." Sismondi directly transfers to capitalist society the morality of the thrifty peasant and seriously imagines that he has thereby made a correction to Smith's teaching. At the very beginning of his work, in the introductory section (Book I, history of science), when discussing Adam Smith, he declares that he "supplements" Smith with the proposition that "consumption is the sole aim of accumulation" (I, 51). "Consumption," he says, "determines reproduction" (I, 119–120), "national expenditure must regulate national income" (I, 113), and similar propositions are scattered throughout the entire work. In direct connection with this stand two other characteristic features of Sismondi's doctrine: firstly, distrust of the development of capitalism, a failure to understand how it creates ever-greater growth of productive forces, a denial of the possibility of such growth – in precisely the same way as the Russian Romantics "teach" that capitalism leads to the squandering of labor, and so forth.

"Those err who incite to unlimited production," says Sismondi (I, 121). An excess of production over income causes overproduction (I, 106). The growth of wealth is beneficial only when "it is gradual, when it is proportional to itself, when none of its parts develops excessively rapidly" (I, 409). The good-natured Sismondi thinks that "disproportional" development is not development (as our Populists also think), that this disproportionality is not a law of the given system of social economy and its movement, but an "error" of the legislator and so forth, that it is an artificial imitation by European governments of England, which has taken a false path [49]. Sismondi completely denies the proposition put forward by the classics and fully adopted by Marx's theory – namely, that capitalism develops productive forces. More than this – he arrives at the view that all accumulation can only be realized "little by little," being completely unable to explain the process of accumulation. This is the second highly characteristic feature of his views. He reasons about accumulation in a most amusing manner:

"In the final analysis, the sum of production of a given year is always exchanged only for the sum of production of the preceding year" (I, 121). Here accumulation is completely denied: it turns out that the growth of social wealth is impossible under capitalism. This proposition will not greatly surprise the Russian reader, for he has heard the same thing from Mr. V. V. and from Mr. N. ——. But Sismondi was nonetheless a pupil of Smith. He senses that he is saying something utterly absurd, and wishes to correct himself:

"If production increases gradually," he continues, "then the exchange of each year causes only a small loss for each year (*une petite perte*), while at the same time improving conditions for the future (*en même temps qu'elle bonifie la condition future*). If this loss is light and well distributed, then each will bear it without complaint… If, however, the discrepancy between new production and the preceding production is great, then capitals are destroyed (*sont entamés*), suffering ensues, and the nation moves backward instead of progressing" (I, 121). It would be difficult to express more clearly and directly the fundamental position of Romanticism and petty-bourgeois views on capitalism than is done in this tirade. The faster accumulation proceeds, i.e., the excess of production over consumption – the better, taught the classics, who, although they were unable to understand the process of capitalist social production, although they were unable to free themselves from Smith's error that the social product consists of two parts, nonetheless put forward the fully correct proposition that production itself creates its market, itself determines consumption. And we know that Marx's theory adopted from the classics precisely such a view of accumulation, recognizing that the faster the growth of wealth, the more fully are the productive forces of labor developed and their socialization achieved, the better the position of the worker – insofar as it can be better within the given system of social economy. The Romantics assert the direct opposite and pin all their hopes precisely on the weak development of capitalism, calling for its retardation.

Furthermore, from the failure to understand that production creates its own market, there follows the doctrine of the impossibility of realizing surplus-value. "From reproduction there arises income, but production itself is not yet income: it receives such a designation (*ce nom!* Thus the distinction between production, i.e., the product, and income is merely in the word!), it operates as such (*elle n'opère comme tel*) only after it has been realized, after each produced thing has found itself a consumer who has need of it or finds pleasure in it" (*qui en avait le besoin ou le désir*) (I, 121). Thus, from the identification of income with "production" (i.e., everything that is produced) there follows the identification of realization with personal consumption. That the realization of such products as, for example, iron, coal, machinery, and so forth, in general means of production, takes place by other paths – Sismondi had already forgotten, although he had approached this closely earlier. From the identification of realization with personal consumption, it naturally follows that capitalists cannot realize precisely surplus-value, for of the two parts of the social product it is the workers who realize wages through their consumption. And Sismondi indeed arrived at this conclusion (subsequently developed in greater detail by Proudhon and constantly repeated by our Populists). In his polemic with McCulloch, Sismondi points precisely to the fact that the latter (expounding Ricardo) does not explain the realization of profit. McCulloch said that with the division of social labor one production is the market for another: grain producers realize commodities in the product of clothing producers, and vice versa [50]. "The author assumes," says Sismondi, "labor without profit (*un travail sans bénéfice*), reproduction which replaces only the consumption of workers" (II, 384, emphasis by Sismondi)… "he leaves nothing for the master"… "we inquire into what becomes of the surplus of the workers' production over their consumption" (ib.). Thus in this first Romantic we already find a quite definite indication that capitalists cannot realize surplus-value. From this proposition Sismondi draws a further conclusion – again precisely the one that the Populists also draw – that by the very conditions of realization, capitalism needs an external market. "Since labor itself constitutes an important part of income, one cannot reduce the demand for labor without making the nation poorer. Therefore, the advantage expected from the discovery of new methods of production almost always relates to foreign trade" (I, 345). "A nation that makes some discovery first succeeds for a long time in expanding its market in proportion to the number of hands freed by each new invention. It employs them immediately in increasing the quantity of products that its invention allows to be produced more cheaply. But there comes at last an epoch when the entire civilized world forms a single market, and when it will no longer be possible in any new nation to acquire new purchasers. The demand on the world market will then be a fixed (*précise*) magnitude, which various industrial nations will dispute among themselves. If one puts forth more products, this will be at the expense of another. General sales cannot be increased except through an increase in general welfare or through the transition of commodities, which were in the exclusive possession of the rich, into consumption by the poor" (II, 316). The reader sees that Sismondi presents precisely that doctrine which our Romantics have so well adopted – that the external market is a way out of the difficulty of realizing the product in general and surplus-value in particular.

Finally, from this same doctrine of the identity of national income with national production, there flows Sismondi's theory of crises. After all the foregoing, we hardly need to cite passages from the numerous places in Sismondi's work devoted to this question. From his teaching about the necessity of proportioning production to income, there follows of itself the view that crisis is the result of a violation of such correspondence, the result of excessive production, which has outstripped consumption. From the citation just given, it is clear that Sismondi considers precisely this discrepancy between production and consumption as the fundamental cause of crises, with the emphasis placed on the insufficient consumption of the masses, the workers. Therefore, Sismondi's theory of crises (also adopted by Rodbertus) is known in economic science as an example of theories deriving crises from underconsumption (*Unterkonsum­ption*).